So what's holding you back?
Rental Property Investor · East Providence, RI · Member since 2018 · 1k+ posts · 1k+ votes
When I help new investors with buying their first property I often want to know what is holding them back from pulling the trigger.
So I'll ask here. What is holding you back?
Having just recently bought my first property, I know for myself what was holding me back was the fear that I would overpay, especially in this type of a market. I would get analysis paralysis and basically talk myself out of every property I looked at.
I've chosen my strategy (buy and hold, cash buyer), but don't know how to choose a market to buy my first property.
I am 29 years old, solid credit in the 800s, NW is around 450k - but can realistically only put out < 100k for my first purchase with rehab because the rest is mostly in retirement accounts. Preferably something < 70k after expenses if that's even realistic?
I don't think I can BRRR because my income has been relatively low on my last few tax returns so financing is probably not an option and I live in Southern California so local properties within driving distance aren't really an option. Anybody have some advice on choosing a market and is my budget even reasonable?
I've chosen my strategy (buy and hold, cash buyer), but don't know how to choose a market to buy my first property.
I am 29 years old, solid credit in the 800s, NW is around 450k - but can realistically only put out < 100k for my first purchase with rehab because the rest is mostly in retirement accounts. Preferably something < 70k after expenses if that's even realistic?
I don't think I can BRRR because my income has been relatively low on my last few tax returns so financing is probably not an option and I live in Southern California so local properties within driving distance aren't really an option. Anybody have some advice on choosing a market and is my budget even reasonable?
@Frank Patalano. Lack of confidence with the state in which I live (Illinois). I am looking into Turn Keys in other states now.
@Frank Patalano. Lack of confidence with the state in which I live (Illinois). I am looking into Turn Keys in other states now.
Turn keys are nice but expect a lower return.
The best deals are usually the ones that you can find yourself. They will usually be local.
I'm a little late to the discussion, but better late than never!? I found out about Biggerpockets 1 year ago, I absolutely love it! I have learned so much over the past year! My wife and I had our first almost 10 months ago, I've found that a baby at the house adds a huge new dynamic to our ability to generate extra income. Our finances are now the issue for our inaction. I also have Fear overpaying, if I'm not the one providing the funds. I found an off market triplex that would cash flow very well but doesn't seem like I can add value, to refinance and pay back my partner/lender.
If you can cash flow very well, do you need to add value? If it's cash flowing well, why can't you pay back your lender?
Is this in Ocala or more Orlando, Gainesville, or Daytona?
@Frank Patalano great topic!
For me it's Capital. Whether your raise capital, borrow from friends and family, or take out a bank loan, you need capital to close deals. Once closed, you need capital to operate the deal to pay the mortgage and expenses.
You need capital to scale bigger.
You don't need capital if you are the deal finder or if you are putting in all of the work but I do agree that capital is a major factor for most people. There are ways around it. I have met up with people with money but no time or experience. They are often putting money into deals instead.
@Frank Patalano I am currently looking in the Ocala area. I guess I have been trying to look at it as a BRRRR type deal where I would be able to pay someone back after doing repairs/improvements and refinancing after the 1st year to pay back the lender/partner. I guess also part of the fear with it is how much the seller is trying to get for the property considering the comps. His property is a triplex, 5/3 with 2066 sqft, asking price of 155k. I found 6 comps, that sold within the last 6 months. Most were larger by about 600 Sqft and newer by 20-40 years. Couple of quads with 2695 Sqft, built in 80's, sold for 130K and 145K. Couple of duplex 6 bed 4 bath, built in 04 and 06 sold for 160K. Duplex built in 60's with 4 bed 4 bath, 1531 sqft, sold for 128K. Only Triplex I found, with 2736 sqft, built in 85 with 6/3, sold for 154k. Even though the property cash flows I found it over priced when looking at comps. But I can offer less than he is asking for. Thanks for the help!
It took me a bunch of lurking and listening to BP podcasts every day for months until I finally decided to bite the bullet and make an account. My biggest hesitations were that I had no savings and that I lived in an expensive market (NYC) which, in my mind, was a double whammy. But everyone has to start somewhere, right?
@Frank Patalano I am currently looking in the Ocala area. I guess I have been trying to look at it as a BRRRR type deal where I would be able to pay someone back after doing repairs/improvements and refinancing after the 1st year to pay back the lender/partner. I guess also part of the fear with it is how much the seller is trying to get for the property considering the comps. His property is a triplex, 5/3 with 2066 sqft, asking price of 155k. I found 6 comps, that sold within the last 6 months. Most were larger by about 600 Sqft and newer by 20-40 years. Couple of quads with 2695 Sqft, built in 80's, sold for 130K and 145K. Couple of duplex 6 bed 4 bath, built in 04 and 06 sold for 160K. Duplex built in 60's with 4 bed 4 bath, 1531 sqft, sold for 128K. Only Triplex I found, with 2736 sqft, built in 85 with 6/3, sold for 154k. Even though the property cash flows I found it over priced when looking at comps. But I can offer less than he is asking for. Thanks for the help!
So offer less than what he is asking. Who cares if he gets pissed? That is what you think its worth. Its called an asking price for a reason.
Those quads sounded like great deals but I don't know how much rehab they need.
What are the expected rents on the triplex?
It took me a bunch of lurking and listening to BP podcasts every day for months until I finally decided to bite the bullet and make an account. My biggest hesitations were that I had no savings and that I lived in an expensive market (NYC) which, in my mind, was a double whammy. But everyone has to start somewhere, right?
Well I'm glad that you started your journey. Sometimes you need education which will be motivation. It will also help you realize that capital is helpful but not a requirement to make money in real estate.
@Frank Patalano Your right! All the properties I listed above were sold within the past 6 months, exception of this property i am interested in. Both Quads sold in 3/19. According to the guy selling the triplex, both of the 2/1 units are renting for 750/month and 800/month. The 1/1 rents for 450/month.
@Frank Patalano
Fear mostly.
I don’t know the necessary steps to take after I find a property that looks distressed.
Step #1 Figure out what you think that it is worth. Estimate what it would sell for fully redone. Estimate rehab costs. Add a buffer.
Step #2 Find out who the owner is. Go to town or county records office. Figure out a way to contact them/ get their number.
Step #3 Get the amount of money lined up that you think you need.
Step #4 Speak to the owner.
There are plenty of foreclosure and pre-foreclosure books out there.
Thank you Frank, I really appreciate it!
@Frank Patalano
Would love your feedback on this house I'm interested in. Have never owned investment property before. I live in a big development and there is a townhouse around the corner I am interested in. It's a bank owned foreclosure and already tenant occupied. The strange thing is the listing says no interior access is allowed. If the bank owns it, why can't I see the property? The list price is excellent, well below comps. I'd wonder if it was in horrible condition, but the place is good enough that it's livible and the tenant is paying 1775 per month, which is right on par with similar townhouses. Without access I am guessing I have to pay cash. I have the savings to do it and then could do delayed financing I guess. But why can't I see the property if the bank owns it?
I'm not holding back anymore (am actively working with my lender + real estate agent to find my next deal), but the factors that held me back when I knew I wanted to make another move were:
1. I'm looking to either flip or BRRRR my next purchase (SFR or duplex); I live in Southern California and am focusing on the Nashville market, so the long-distance flipping is daunting. Luckily I have great contacts (though I can always use more!) who I'm working with for finding a reliable contractor and PM, etc.
2. Nashville's market is hot - a lot of people probably saw it listed as one of the top places nationwide to invest in real estate. That said, it's hard to find a home where you can still make a decent profit to roll into the next investment after all the rehab is done if you can't do the work yourself (which is my exact scenario).
3. I am going through a career change and taking a 60% pay cut; it's 100% worth it because I am leaving a job that broke me down and entering a career field that I find purpose in, but all the same, it's scary to think about taking out a loan or spending most of my savings on an investment that *could* go south very quickly.
I reasoned through all of that with my boyfriend (who is of the same mindset as me in terms of wanting to dig in to real estate) and some friends/mentors I respect; I also read a string of books that reminded me that failure is inevitable, but as long as you are working through your chosen process (investing, training for a race, whatever) with good analysis and a great team behind you, you will always learn more and be able to use that as a platform to leap from for the next go-round. I am excited to move forward and take some risks; I have found a lot of useful knowledge on BiggerPockets that's made me more comfortable with these risks. If I could recommend one thing for those worried about taking the next step, I would say to read "Chop Wood, Carry Water." That - and knowing I had a strong network of folks wanting me to succeed - was what propelled me forward.
I'm not holding back anymore (am actively working with my lender + real estate agent to find my next deal), but the factors that held me back when I knew I wanted to make another move were:
1. I'm looking to either flip or BRRRR my next purchase (SFR or duplex); I live in Southern California and am focusing on the Nashville market, so the long-distance flipping is daunting. Luckily I have great contacts (though I can always use more!) who I'm working with for finding a reliable contractor and PM, etc.
2. Nashville's market is hot - a lot of people probably saw it listed as one of the top places nationwide to invest in real estate. That said, it's hard to find a home where you can still make a decent profit to roll into the next investment after all the rehab is done if you can't do the work yourself (which is my exact scenario).
3. I am going through a career change and taking a 60% pay cut; it's 100% worth it because I am leaving a job that broke me down and entering a career field that I find purpose in, but all the same, it's scary to think about taking out a loan or spending most of my savings on an investment that *could* go south very quickly.
I reasoned through all of that with my boyfriend (who is of the same mindset as me in terms of wanting to dig in to real estate) and some friends/mentors I respect; I also read a string of books that reminded me that failure is inevitable, but as long as you are working through your chosen process (investing, training for a race, whatever) with good analysis and a great team behind you, you will always learn more and be able to use that as a platform to leap from for the next go-round. I am excited to move forward and take some risks; I have found a lot of useful knowledge on BiggerPockets that's made me more comfortable with these risks. If I could recommend one thing for those worried about taking the next step, I would say to read "Chop Wood, Carry Water." That - and knowing I had a strong network of folks wanting me to succeed - was what propelled me forward.
Awesome story. Keep it up.
I'll have to check out your reading recommendation.
@Frank Patalano
Would love your feedback on this house I'm interested in. Have never owned investment property before. I live in a big development and there is a townhouse around the corner I am interested in. It's a bank owned foreclosure and already tenant occupied. The strange thing is the listing says no interior access is allowed. If the bank owns it, why can't I see the property? The list price is excellent, well below comps. I'd wonder if it was in horrible condition, but the place is good enough that it's livible and the tenant is paying 1775 per month, which is right on par with similar townhouses. Without access I am guessing I have to pay cash. I have the savings to do it and then could do delayed financing I guess. But why can't I see the property if the bank owns it?
Here is my guess.
Just because it is tenant occupied doesn't mean that the tenant is paying. Perhaps they are difficult to deal with. If you can get it for a deep discount price you can always refi later after you evict the current tenants.
Like I said just a guess. If it is so cheap and no one is buying it that could be a reason.
Okay thanks i will have to find out. The property just hit the MLS 2 days ago. I'm a little baffled why it is priced so low compared to the comps..I was hoping it is because you can't view the inside but I guess it could be the tenants are difficult.
@Frank Patalano - no, I do not currently have a home in my name. I just completed the process of setting up my LLC with the state. I have been starting to send letters. I've made some good contacts so I just have to have faith that my knowledge and hard work will eventually pay off.
@Frank Patalano - no, I do not currently have a home in my name. I just completed the process of setting up my LLC with the state. I have been starting to send letters. I've made some good contacts so I just have to have faith that my knowledge and hard work will eventually pay off.
If it was me I would have house hacked my first one.
But action will be paid off either way.
@Frank Patalano Banks! I’ve just started out in the cortland/Syracuse NY area. I am a 800 credit score with 100k in the bank. No debt, never missed a payment. Problem is I bartend and I don’t report all my income. So it looks like I make around 30k a year. Any advice?
It took me a bunch of lurking and listening to BP podcasts every day for months until I finally decided to bite the bullet and make an account. My biggest hesitations were that I had no savings and that I lived in an expensive market (NYC) which, in my mind, was a double whammy. But everyone has to start somewhere, right?
Well I'm glad that you started your journey. Sometimes you need education which will be motivation. It will also help you realize that capital is helpful but not a requirement to make money in real estate.
Thanks, Frank! This is something I am trying to figure out now as a person who does not have much capital, but is willing to put in sweat equity and contribute however else I can.
It took me a bunch of lurking and listening to BP podcasts every day for months until I finally decided to bite the bullet and make an account. My biggest hesitations were that I had no savings and that I lived in an expensive market (NYC) which, in my mind, was a double whammy. But everyone has to start somewhere, right?
Well I'm glad that you started your journey. Sometimes you need education which will be motivation. It will also help you realize that capital is helpful but not a requirement to make money in real estate.
Thanks, Frank! This is something I am trying to figure out now as a person who does not have much capital, but is willing to put in sweat equity and contribute however else I can.
You need to be networking in your social circles
Find someone who is willing take a risk with you. There are people out there with money but no time.
@Frank Patalano Banks! I’ve just started out in the cortland/Syracuse NY area. I am a 800 credit score with 100k in the bank. No debt, never missed a payment. Problem is I bartend and I don’t report all my income. So it looks like I make around 30k a year. Any advice?
I had a friend who had a negative income 2 years in a row. We partnered on a free deals together. I was the money and credit partner. He was the time partner.
For me it’s the fear that I will end up in financial ruin. Which logically, I don’t think is likely. But emotionally I still have that fear. My boyfriend and I just bought a residence for ourselves. And we have stable jobs. He makes really good money but his is oil and gas so more risky. We could live on my income if we needed to. We’re both engineers. Overall I think we CAN do it and I don’t think we would end up in trouble. But I just have a fear of actually pulling the trigger.